124 JUST GROUP PLC Annual Report and Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
4 OTHER OPERATING EXPENSES continued During the year the following services were provided by the Group’s auditor at costs as detailed below:
Year ended 31 December
Year ended 31 December
2019 £000 250
2018 £000 125
Fees payable for the audit of the Parent Company and consolidated accounts
Fees payable for other services: The audit of the Company’s subsidiaries pursuant to legislation
950
885
95
Corporate finance services
1,155
710 218
Audit-related assurance services
653 222
Other assurance services Auditor remuneration
2,223
3,040
Audit-related assurance services mainly include fees relating to the audit of the Group’s Solvency II regulatory returns. Other assurance services mainly include fees relating to review procedures in relation to the Group’s interim results. Corporate finance services relate to due diligence and reporting accountant services.
5 FINANCE COSTS
Year ended 31 December 2019 £m
Year ended 31 December 2018 £m
139.0
Interest payable on deposits received from reinsurers
159.2
44.0
Interest payable on subordinated debt
39.9
3.7
Other interest payable Total finance costs
3.7
186.7
202.8
The interest payable on deposits received from reinsurers is as defined by the respective reinsurance treaties and calculated with reference to the risk-adjusted yield on the relevant backing asset portfolio.
6 SEGMENTAL REPORTING Adjusted operating profit
The Group reports adjusted operating profit as an alternative measure of profit which is used for decision making and performance measurement. The Board believes that adjusted operating profit, which excludes effects of short-term economic and investment changes, provides a better view of the longer-term performance and development of the business and aligns with the longer-term nature of the products. The underlying operating profit represents a combination of both the profit generated from new business written in the year and profit expected to emerge from the in-force book of business based on current assumptions. Actual operating experience, where different from that assumed at the start of the year, and the impacts of changes to future operating assumptions applied in the year, are then also included in arriving at adjusted operating profit. New business profits represent expected investment returns on financial instruments backing shareholder and policyholder funds after allowances for expected movements in liabilities and acquisition costs. Profits arising from the in-force book of business represent the expected return on surplus assets, the expected unwind of prudent reserves above best estimates for mortality, expenses, corporate bond defaults and, with respect to lifetime mortgages, no-negative equity guarantee and early redemptions. Adjusted operating profit excludes the impairment and amortisation of goodwill and other intangible assets arising on consolidation, non-recurring and project expenditure, implementation costs for cost-saving initiatives, and investment and economic profits, since these items arise outside the normal course of business in the year. Adjusted operating profit also excludes exceptional items. Exceptional items are those items that, in the Directors’ view, are required to be separately disclosed by virtue of their nature or incidence to enable a full understanding of the Group’s financial performance. Variances between actual and expected investment returns due to economic and market changes, and gains and losses on the revaluation of land and buildings (including the properties underlying the LTMs), are also disclosed outside adjusted operating profit. Segmental analysis The insurance segment writes insurance products for the retirement market – which include Guaranteed Income for Life Solutions, Defined Benefit De-risking Solutions, Care Plans, Flexible Pension Plans and Protection − and invests the premiums received from these contracts in debt securities, gilts, liquidity funds and Lifetime Mortgage advances. The professional services business, HUB, is included with other corporate companies in the Other segment. This business is not currently sufficiently significant to separate from other companies’ results. The Other segment also includes the Group’s corporate activities that are primarily involved in managing the Group’s liquidity, capital and investment activities.
The Group operates in one material geographical segment, which is the United Kingdom.
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